Thursday, August 18, 2011

Morgan Stanley: US growth forecast reduced

Analysts at Morgan Stanley reduced their forecast global economic growth in 2011 from 4.2% to 3.9% and in 2012 – from 4.5% to 3.8%.

As the main reason for the downside revision the specialists cited the debt burdens of developed nations.

According to the bank, the policymakers didn’t do enough to contain the euro zone’s debt crisis, while the business and consumer confidence weakened due to the German economic slowdown and the looming threat of the recession in the United States. In addition, the situation is complicated by the fact that many governments have to conduct austerity measures.

The bank diminished prediction for G10 nations from 1.9% to 1.5% this year and from 2.4% to 1.5% in 2012.

Fiscal tightening will have a negative impact on the demand in the Western world that, in its turn, will affect Chinese economy. Morgan Stanley cut the projections for China’s growth from 9% to 8.7% (in 2012), while Deutsche Bank lowered the forecast from 9.1% to 8.9% (in 2011).